Does Your Small Business Need A CFO?

Arms and hands of person using laptop and calculator

A chief finance officer (CFO) is the go-to guru for all things related to the financial running of your business. When small businesses first get started, it’s common for the company’s director to try and take on the role themselves.  This is fine when you’re still keeping things small, but once you start expanding your team it’s a good idea to think about who’s going to take charge of the money.

What does a CFO do?

Don’t mistake a CFO for an accountant. While almost all companies will need someone to manage their accounts, ensure taxes are filed properly and balance the books, the role of a chief financial officer is more about planning for the future. They will think about how the business should invest its money, deal with lenders and investors as well as business partners, and effectively become the financial face of the company.

A CFO is not essential for smaller businesses

When you’re still growing your business, or if you’re happy to maintain a small company that pays your salary but doesn’t have higher ambitions, then a CFO is probably unnecessary. Once your business starts to turn over more money than you feel confident managing, or you start to deal with a lot of investment capital (i.e. other people’s money), then it may be time to bring in an expert.

It’s also worth considering other types of financial role. If all you need is somebody to look after your financial data and keep the records up to date, then you probably need a Bookkeeper on the payroll. If your company is slightly larger, and you have hired a bookkeeper/accountant but now want somebody more senior to oversee your finances, then this is the role of Controller. A Controller is a very helpful person to have on your team, as they will manage your financial staff, ensure that your policies and processes are up to date and fit for purpose, create and sign off on financial reports. In brief, they will ensure that your company’s existing finances are well looked after.

The CFO goes beyond this, and will play a key role in making major business decisions. They are responsible for planning financial goals, managing risk and understanding your place in the market.

Consider a remote or ‘portfolio’ CFO

Many smaller companies, and particularly start-up businesses that are aiming to grow rapidly, find themselves in an awkward in-between position. Perhaps your business is not quite ready for the hefty financial investment that comes from hiring an experienced CFO. At the same time, you may be starting to manage more capital than you’re comfortable with, and feeling the need for an expert to help you plan.

Business owners in this position may want to consider a remote CFO service, or a so-called portfolio CFO – somebody who contracts with several different businesses to provide CFO services. This can be a great option for those who want to benefit from the expertise of a Chief Financial Officer without bringing somebody onto the payroll full time.

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